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URA issues acquisition offers for two Tai Kok Tsui projects

The Urban Renewal Authority (URA) today (Tuesday) issued offer letters to owners of 370 property interests in Tai Kok Tsui to acquire their properties within the boundaries of the Larch Street/Fir Street and Pine Street/Anchor Street redevelopment projects. The total acquisition and rehousing cost is estimated to be about $1.13 billion.

Affected owner-occupiers of domestic properties will be offered $4,038 per square foot on a saleable area basis. Built in the 60's, most of the properties are in a dilapidated condition. As a whole, their open market value is estimated to be about $1,300 per square foot of saleable area.

The URA acquires property interests by private agreements with individual owners. The acquisition offers are based on the Government's Home Purchase Allowance (HPA) policy plus a URA incentive of incidental cost allowance. HPA is the difference between the market value of a notional seven-year-old flat in a comparable quality building in a similar locality (commonly known as "seven-year rule") and that of the acquired property. Owner-occupiers will receive the full HPA amount whereas owners of tenanted and vacant domestic properties will receive a supplementary allowance up to half of the HPA.

A URA spokesman emphasised that the value of a seven-year-old notional flat was meant for calculating the cash compensation offers and did not imply any guarantee for the market supply of seven-year-old flats in the locality. Owners have the sole discretion on how to use the cash compensation according to their personal needs and preferences.

The spokesman said: "Whilst the seven-year rule remains unchanged, we have refined the valuation process for HPA assessment after considering the views of various sectors of the community and discussions with the Yau Tsim Mong District Advisory Committee of the URA. The purpose is to enhance the transparency of the process."

Being tried out in these two projects, the new process involves changing the award of tender to the lowest bidder to a fixed price tender when appointing seven independent surveyors for the valuation exercise. Any surveyor firm that meets the basic prescribed professional, experience and related requirements can express its interest to the URA upon which seven will be selected by ballots.

To ensure impartiality and fairness, the URA has invited independent personalities to administer the ballot. The Chairman of the Yau Tsim Mong District Council, Mr Chan Man Yu; Yau Tsim Mong District Councillor, Mr Tsung Po-shan and the President of the Hong Kong Institute of Surveyors, Mr T.T. Cheung officiated at the ballot exercise for selecting the seven valuation consultants for the two Tai Kok Tsui projects. Mr Tsung also attended the briefing session for the appointed seven valuation consultants.

The URA has also decided to make public the names of the seven appointed surveyor firms and their assessments for the HPA rate.

In addition, the previous weighted average method for calculating the seven assessed HPA unit rates has been changed to a simple average method so as to make it easily comprehensible to all parties concerned. The practice of discounting the lowest and the highest of the seven valuations before averaging will be retained to minimise any bias in the exercise.

The spokesman said: "Taking public views into account, we have come up with this trial process to enhance its transparency so as to further boost owners' confidence in our offers."

Affected owners will have ample time to consider the URA's offers and to accept them within the next 60 days, he said. In addition to the acquisition offers, owners will receive an incidental cost allowance (ICA), where applicable, as an incentive for them to accept the offers within the 60-day period. This allowance serves as a subsidy for the removal and various other expenses normally incurred in the purchase of a replacement flat. The ICA is reviewed from time to time in accordance with the Government's rate of ex-gratia removal allowance and the Composite Consumer Price Index.

For the Larch Street and Pine Street projects, the ICA for owner-occupied domestic property is $92,700 or $990 per square metre (about $92 per square foot) of the saleable area, whichever is higher. For domestic property that is tenanted or vacant, the ICA is $70,800.

For non-domestic properties, the acquisition offers will include an ex-gratia allowance on top of the open market value. The allowance for tenanted or vacant non-domestic property is 10 per cent of its market value or one time the government rateable value, whichever is higher. The allowance for owner-occupied non-domestic property is 35 per cent of its market value or four times its rateable value, whichever is higher.

Following the issue of purchase letters, the URA will hold briefing sessions next week to explain to the owners and tenants the URA's acquisition and compensation/rehousing arrangements. Residents can also contact the URA's Neighbourhood Centre in Tai Kok Tsui or call the URA hotline at 2588 2333 for any enquiry they may have.

The Authority has also commissioned an urban renewal social service team staffed by professional social workers of the Salvation Army to provide counselling service and practical assistance to residents who may encounter personal or family problems.

The total development cost of the two projects is estimated at about $2.04 billion, including $1.13 billion for the cost of property acquisition and tenant rehousing or compensation, which has been adjusted to reflect the findings of the occupancy surveys conducted at the projects sites earlier by URA.

With the implementation of the two new projects, the URA has announced a total of 21 redevelopment projects since commencement of its redevelopment programme in March 2002, including six in association with the Hong Kong Housing Society. The total development cost of these 21 projects is estimated at about $16.6 billion.